CRM2: disclosing investment performance and the cost of advice

CRM2: disclosing investment performance and the cost of advice

CRM2 introduces new annual reporting requirements

Building on previous implementation periods, in 2016 the final amendments of the Client Relationship Model – Phase 2 (CRM2) will come into effect. They require most registered firms to produce annual reports that give a clear picture of both their clients’ investment performance and charges in that period.

CRM2: disclosing investment performance and the cost of advice

Providing standard reporting to investors about their investments

New reporting standards require information such as changes in the value of a client’s account and personal rates of return using a money-weighted method of calculation.

CRM2: disclosing investment performance and the cost of advice

Providing standard reporting to investors about the cost of advice

Investors will now receive detailed, standardized reports on certain fees charged to them, including an annual summary of charges and compensation earned by their advisor and/or dealer firms for operations and transactions.

CRM2: disclosing investment performance and the cost of advice

Greater transparency on charges and compensation

One of the biggest impacts of CRM2 is the standardization of reporting on other types of compensation dealers and advisers may receive, such as trailer fees that are paid by third parties to your firm for ongoing services. This transparency will enable investors to better understand all aspects of an investment.

CRM2: disclosing investment performance and the cost of advice

Smart investors, dealers and advisers are embracing CRM2’s changes

Developing strong relationships between dealers, advisers and investors is the goal of CRM2. Everyone is encouraged to learn more about the changes and how CRM2 will affect their investments, their outcomes and their professional relationships.